Government

On the theory of growth controls

Article Abstract:

Increases in housing prices due to the imposition of growth controls have both demand and supply side explanations. Previous studies that have focused on the latter show that zoning restrictions, development limitations and housing caps reduce the supply of housing. However, this scarcity effect may be neutralized by the amenity effects produced when such growth controls reduce congestion and/or negative externalities. Growth controls may thus be welfare-improving, contrary to the view that they result in dead weight losses due to supply restrictions. The results suggest that previous research are not only biased, they also suffer from the use of endogenous growth control dummies. Price increases due to growth controls also indicate the existence of negative externalities. Finally, owners of developed land may organize to effect growth controls only when such problems become severe.

An analysis of the efficiency of urban residential structure, with an application to racial integration

Article Abstract:

Conditions for the efficient allocation of households to residential locations are offered and analyzed to see if these are satisfied by competitive markets. It was shown that a competitive market can efficiently assign residential activity across space in many cases, but not in cases wherein demographic externalities exist. These externalities occur when the identity of their neighbors becomes relevant to residents. The inefficiency of competitive markets in the presence of demographic externalities is demonstrated in cases involving racial preferences. In such cases, a competitive market yields segregated outcomes under certain circumstances that facilitate efficient integration.